Adapting Corporate Culture – Before It’s Too Late: Lessons From Better.com

By Gaurav Gupta

Every so often, the internal culture of an organization becomes visible to the outside world when bad decisions or poor behavior reveal the underbelly of the beast. Most recently, the CEO of Better.com brought his company’s culture into the public eye by announcing 900 layoffs over Zoom. He has since apologized and taken a leave of absence, but the press coverage has prompted a third-party investigation into Better.com’s working environment, which revealed that the CEO’s behavior was reflective of a poorly evolved culture.

Toxic cultures can stem from the bad intentions of bad leaders, but more often, they are a product of behaviors that were once helpful. Shifting external or internal environments can quickly change what is needed for continued success. In the natural world, some species—such as those in the Arctic who have adapted to cold weather and depend on sea ice—are facing extinction because they cannot evolve quickly enough to survive the environmental effects of climate change. Companies can also become endangered if behaviors and culture don’t adapt to meet new norms. However, unlike in the natural world, leaders can deliberately and intentionally shape the evolution of organizational culture to match the current context.

The value of having a “good” culture is reflected in Peter Drucker’s oft-repeated quote, “Culture eats strategy for breakfast.” While few would argue that culture is important, there is often not much alignment on what it means to have a “good” culture and even less on how to create it. Research dating back to the 1980s, which is discussed in our recent book Change, demonstrates that the most successful cultures are sensitive to changes in context and able to evolve accordingly.

It is easy to imagine Better.com encouraging directness, accountability, and hustle in its early years as a startup, but as the company grew and lost the intimacy of a startup, this win at all costs behavior drifted into an overly productivity-obsessed, uncaring culture. Better.com’s CEO did not adapt his communication style, behavior, and actions to match the context of a well-established company facing significant headwinds. So how can leaders adapt their corporate culture before it is too late?

1.    Look for inconsistencies between what’s preached and what’s practiced

Not everything put on paper matches what happens in reality. Peer pressure, unspoken expectations, and personal opinions often come between intended and actual results. This is frequently the case with culture, where the stated culture is often far from what is experienced by most employees.

As a result, it is important to regularly ask what behaviors are incongruous with your organization’s stated values. If collaboration is central to your mission, but information is not being shared between departments or title levels, the culture may no longer be supporting a collaborative mindset. If you value high expectations and meritocracy, but turnover and internal promotions are lagging, there may be a disconnect between which behaviors are being rewarded and which should be rewarded.

2.    Identify environmental changes that warrant new behaviors

While growth and expansion are natural extensions of success, they also demand careful examination. Your company may have achieved its early goals by building a culture that will not support long-term progress. Behaviors that were helpful several years ago can easily become harmful to how employees operate.

For example, Uber initially encouraged an ultra-competitive culture, which may have helped it expand quickly and compete favorably with rivals. But as ride sharing became more popular and fell under scrutiny, these competitive behaviors expanded in problematic ways that were no longer helpful. Remain vigilant about cultural, political, and financial changes that could turn beneficial habits into maladaptive ones.

3.    Create a culture whistleblower process

Leaders don’t always have the bandwidth to manage every part of their organization, so small misalignments can get amplified and lead to bad behavior. If this behavior is rewarded, it can quickly become part of the culture, or at least the sub-culture of a region or department. Once undesired behavior becomes integrated into everyday activities, fewer people are willing to speak or act against it unless an established process is in place to do so.

Recently, the SEC charged Kraft-Heinz with a long-running financial and procurement scheme to inappropriately reduce the company’s cost of goods, which caused Kraft-Heinz to restate its financials when the information first came to light in the summer of 2019. The practice seems to have been ongoing since 2015, yet all indications are that it was not well understood by leaders internally.

Most organizations have mechanisms for anonymous whistle blowing to report unethical behavior. The same mechanisms can be used to flag behaviors that are incongruous with the company’s stated values and culture. An internal whistleblower program could serve as an early warning sign for leaders when the culture evolves in unanticipated and unhelpful ways.

4.    Encourage and reinforce desired behaviors

Culture is not something you can change head-on. Instead, the mechanism for culture change starts with new actions and behaviors. When these produce (or are perceived to produce) superior results, they are emulated, which forms habits that eventually influence culture. Leaders, therefore, need to clearly communicate, reinforce, and reward the behaviors that will move the organization closer to its goals. The “right” culture will follow.

News revealing seemingly poor work environments like Better.com’s can sometimes be chalked up to a few bad leaders acting with bad intentions. Yet, in many cases, it is not malice, but rather an inability to proactively and deliberately shape culture that results in toxic cultures. The new reality of the Covid-19 pandemic has exacerbated the challenge by creating even more distance between leaders and their teams. Assessing the health of the company culture must be high on the agenda to proactively identify and address potentially destructive behaviors. Intentional evolution is critical to ensuring that culture continues to be an enabler, not a detractor, of progress.